Oil tumbles on Libya deal hopes, global demand woes

Oil prices dropped nearly 5% on Tuesday, hitting their lowest levels in almost nine months, due to signs of a potential resolution in the Libyan dispute that has stalled crude production and exports. Brent crude futures fell by $3.77 to settle at $73.75/barrel, marking the lowest since December 12. WTI crude declined by $3.21 to $70.34/barrel, its lowest since December as well.

Libya’s legislative bodies agreed to appoint a new central bank governor within 30 days following U.N.-sponsored talks. Libyan oil exports were halted at major ports, and production was reduced across the country due to ongoing disputes between political factions over control of the central bank and oil revenues. The National Oil Corp (NOC) of Libya declared force majeure at its El Feel oilfield starting September 2.

Oil prices continued to decline on Wednesday’s intra-day sessions. ISM US Manufacturing PMI remained sluggish in August, while manufacturing activity fell to a six-month low in China, raising concerns over global demand.

Brent futures traded 40 cents lower at $73.35/barrel while WTI hovered around $70/barrel, down by 48 cents at the time of writing.